USA or Zimbabwe?

From Dr. Martin A. Weiss at Uncommon Wisdom:

FACT #1: The official national debt now stands at $12.68 trillion — an amount equal to about 88.5% of all the goods and services our economy produces in an entire year.

FACT #2: Contingent obligations for Social Security, Medicare, Medicaid, veterans, and pensions now stand at an additional $108 trillion over and above the "official" national debt.

FACT #3: State, county and local governments are nearly $3 trillion in debt. Many can't pay and will ultimately demand that Washington assume responsibility for that debt as well.

FACT #4: Total federal, state and local government indebtedness now stands at a mind-blowing $123.6 trillion.

FACT #5: Last year, Washington added $1.4 trillion to the debt. In this fiscal year, the Obama administration will add another $1.6 trillion!

FACT #6: In addition to funding the current trillion-dollar-plus deficits, the U.S. Treasury must borrow MORE each year to replace bills, notes and bonds that are maturing.

FACT #7: This record-shattering borrowing by the Treasury has resulted in a Mt. Everest of Treasury obligations being dumped onto the market, which naturally depresses bond prices and drives interest rates higher.

FACT #8: In a desperate attempt to keep interest rates low, the Bernanke Federal Reserve has created $1.25 trillion out of thin air to buy mortgage-backed securities ... another $300 billion to buy U.S. Treasuries ... and yet another $170.6 billion to buy other government bonds — a total of nearly $1.7 trillion in all.

FACT #9: From September 10, 2008 to March 10 of this year, Bernanke increased the nation's monetary base from $850 billion to $2.1 trillion — a 250% increase in just 18 months.

FACT #10: Despite this massive money-printing, the yield on the benchmark 10-year Treasury note has STILL risen by more than one-fifth — from 3.2% to 3.86% — since December.

FACT #11: Because of this massive money-printing, the U.S. dollar has lost nearly 10% of its value in the past 12 months alone.

The Clowns in Washington have to STOP THE SPENDING!

The Dollar Is Falling!

And our leaders are encouraging it because it preserves their power momentarily. Just look at the chart above left. We've already heard about this year's new trillion dollar plus deficit; it's 3.5 times the unconscionable debt we had under Bush in 2008. And which debt Obama strongly attacked when he was just a candidate; however, when he gained power, he suddenly forgot the danger. When added to recent deficits, the sum totals $11.8 trillion.

Because nothing drastic has happened yet, and because the Obama administration has been so terribly busy trying to change our country, most Americans have become numb to the implication of the facts before them.

However, other countries have not been so complacent. They are shifting out of dollar denominated investments and debts because they clearly see the (almost) inevitable decline in the dollar's value.

Perhaps they are paying attention to our unfunded debt such as Social Security, Medicare, Medicaid, Veteran's Benefits, and government pensions. These are not even listed on the balance sheet, but they amount to almost $104,000,000,000,000 in the foreseeable future.

If Obama passes a Health Care Reform bill, inevitably more will be added to the deficit.

And yet our leaders loudly whistle past the graveyard while they busily print more money to pay back our debts with less valuable dollars. No wonder there is a growing demand for a new international currency.

Ancient Rome, the Byzantine Empire, and Post WWI Germany all tried to use the same method when national obligations became too great to ever pay back.* After all inflation is a silent tax and many hardly even notice when politicians do it. But inevitably, it leads to the ruin of the country. In the fourth century AD, the Roman denarius fell to 1/50 of its value in a mere 13 years. The Bezant took longer, but by the 14th century it had virtually ceased to exist despite the fact it had once been the international currency. The Reich mark plunged from 4.2 to the dollar before WWI to 1,000,000 to the dollar by August 1923.

The chart below illustrates the dollar's loss of value in recent years -- 36% when compared to other currencies and a whopping 75% compared to gold. Without a drastic change in Washington, the dollar will decline even more precipitously.

*One economic writer, Larry Edelson, believes that if the US government started paying off its debts at the rate of $100,000,000 every single day, it would take 3,446 years before the debt is paid off. The statistics above came from the Uncommon Wisdom website.

Everybody Is Cheering

After all the Dow topped $10,000 yesterday. But what does it mean? With Treasury printing presses running at top speed, it doesn’t carry the same financial euphoria it used to.

For example, ten years ago the Dow was $11,497 and it would have taken 40.6 ounces of gold to equal that value. But yesterday’s Dow would only require 9.44 ounces of gold to “buy” that amount.

Inflation has plagued the US all through the 20th Century and threatens to become worse in the 21st because our Federal government insists on spending more money than we can reasonably pay back. Like the Banana Republics we recently disdained, we keep printing more fiat money to avoid raising taxes and to hide the growing reluctance of other countries to buy our treasuries.

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose."
- John Maynard Keynes, 1920

American Revolution or American Renaissance?

Gerald Celente from Trends Research Institute explains his views of America's future in this video clip that is well worth watching. He believes that we are near a turning point that could lead to either revolution or renaissance. Pray that it will be a renewal of freedom and American ideals, not a socialist coup.

Please scroll down to stop the video by Robert Kiyosaki manually before watching this video. I've tried to change it to play manually, but the silly things insists on doing it automatically. As a former boss used to say, "Technology teaches you patience."

If you want to follow up with more info, this video came from Wall Street Survivor.

Gold Price Is No Surprise

First, "they" devalued your carefully saved investments with the great financial crisis and stock market crash last year, then "they" started spending money as fast as it could be printed, setting the stage for inflation to wipe out the value of what little you had left. The dollar that was recently (2002) valued at $1.24 in the international market is now worth $0.74. So people are running to any investment that will rise higher than inflation. Many people believe that it's gold which closed today at $1,055. It still hasn't reached the inflation adjusted high of $2,275.99 from 1980 when the country was mired in stagflation, but it's headed in that direction.

In times like these, you need to exercise all the creativity you have to protect your assets and provide for your family. I suggest you get started by watching this interview with Robert Kiyosaki, author of Rich Dad, Poor Dad. He may not have the exact plan for your situation, but he will help you to start thinking outside the box.

Everyone Understands Except The Politicians

It’s just common sense to understand the danger of continuing unbridled spending by Washington. Last week Ben Bernanke testified to the House about the grave hazard of our burgeoning debt.

His bottom line was our level of borrowing and spending cannot continue at the current rate. When asked about the possibility of the United States losing its AAA credit rating just as England did recently, Bernanke could offer no desirable outcome.

“At -- at some point, you have to have a path of spending and taxes that will give you a stabilization of the debt-to- GDP ratio. If you don't, then fear that the debt will continue to rise will make it very difficult to finance it.

And at some point, you'll hit a point where you'll have to have both very draconian cuts and very large tax increases, which is not something we want. So in order to avoid that outcome down the road, we need to begin now to plan how we're going to get the fiscal situation into a better balance in the medium term. ...”

And he refused to comment on the possibility of rampant inflation, although his questioner brought it up. Read more at Powerline.

Have you told your Congressional Clowns to STOP THE SPENDING? If so, remind them again.

Get Your Dialing Finger Ready

Congress is back in session and up to no good. Please contact by phone and/or email your own Congressional Clowns to insist they STOP THE SPENDING!

Last week Chinese students laughed out loud at both Congressman Nancy Pelosi and Secretary Timothy Geithner when they started explaining the administration’s “responsible” spending policies while visiting China. Why do 18-year-olds catch on immediately while more experienced American journalists are still fooled by Obama’s sophistry?

Masters of The Universe, Or at Least of The US

According to Simon Johnson, former economist at the IMF, our current financial crisis sounds distressingly familiar to problems he handled with smaller countries. Powerful elites from both Washington and Wall Street have over reached during good times and now they need to drastically change their ways. So far both the Bush and Obama administrations have provided cover rather than forcing change because the financial sector has grown too powerful.

Since facing reality does not appear likely any time soon, he fears a depression deeper than The Great Depression looms on the horizon. The Atlantic carries his sober assessment of our problems. Read it if you dare.

Warning: Danger Ahead

The Federal Reserve quietly slipped $1,200,000,000,000 into the economy this week. The only trouble, it was just printed money, not increased wealth. That move, officially known as Quantitative Easing is sort of like a college student drinking a triple latte to keep going after an all night party. It appears to solve the problem for awhile, but eventually the lack of sleep catches up and there is an inevitable crash, even in strong, healthy 18 year olds.

Printing money seems to help the economy because it does stimulate spending in many quarters at first. However, it will eventually backfire because the currency in devalued and inflation becomes a problem. Within hours of this change in US monetary policy, the price of gold shot up to $960 an ounce, indicating a loss of confidence in the dollar. Let us hope that we can muddle through the current economic problems without trying that again.